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Bell, Telus, Rogers sell off on Verizon rumour

Reports Wednesday said Verizon Wireless parent Verizon Communications Inc. of New York has made a $600 to $800 million tentative offer for Toronto-area based cellular provider Wind Mobile and has had buyout talks with smaller startup Mobilicity.
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Business customers rather than consumers would be the first to benefit from any move north by U.S. communications giant Verizon Wireless, an industry analyst said Wednesday.

Iain Grant of telecom consultancy the SeaBoard Group said Verizon could offer corporate roaming deals to customers travelling between Canada and the U.S.

But he said any roaming cost benefits to consumers would be slow in coming because Verizon would still need to spend billions to build out a network available to customers outside of major centres in Canada.

And he said Verizon would enter the country as a small player, leaving incumbent operators with control over 90 per cent of the market and significant say over consumer pricing.

Reports Wednesday said Verizon Wireless parent Verizon Communications Inc. of New York has made a $600 to $800 million tentative offer for Toronto-area based cellular provider Wind Mobile and has had buyout talks with smaller startup Mobilicity.

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Verizon and Wind declined comment although a Verizon spokesman last week said the company was evaluating the Canadian market and Wind among a number of options.

Grant said Verizon could be eyeing Canada to acquire Wind’s radio waves and to enter an auction of valuable radio spectrum scheduled for February. He said Verizon might be looking to link “highly complementary” network infrastructure as part of a broader international expansion.

But observers have also noted that Verizon could be constrained by Ottawa’s rules that limit foreigners to ownership of wireless companies with no more than 10 per cent of the Canadian wireless market. They say Verizon may also be preoccupied with battling rival AT&T in the U.S., and with a process that could result in consolidation of its ownership.

If Verizon were to enter Canada, however, it would pose a significant challenge to the country’s domestic wireless carriers, which historically have faced limited foreign competition due to federal ownership rules.

Shares of Vancouver-based Telus, the country’s third-largest wireless carrier, were down 10 per cent shortly after the Toronto Stock Exchange opened Wednesday. Those shares dropped $3.37 to $30.

Shares of Rogers Communications, which controls roughly 35 per cent of the Canadian wireless market were down nine per cent, falling $4.14 to $41.75, and BCE, parent of Bell Canada, fell about five per cent, giving up $2.10 to trade at $41.22.

All three of the Canadian telecommunications companies get significant portions of the profit from their wireless businesses, which provide services to consumer and business cellphones and smartphones.

Mobilicity, Wind and Public Mobile emerged from a 2008 government auction of airwave spectrum with discount talk-and-text plans that have led to price cutting by incumbents. But the startups have faced financial stress as they attempt to compete with the incumbents and Wind was put on the block earlier this year by its Dutch-based owners. Mobilicity debt holders are to vote on a recapitalization plan early next week.

Ottawa has signaled that it wants a fourth wireless competitor in all Canadian regions – and has also indicated that it does not want the entrants to be scooped up by incumbents.

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